Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

UK govt wants consumers to pay up front for new nuclear plants

Published 26/10/2021, 14:26
Updated 26/10/2021, 16:46
© Reuters. FILE PHOTO: The British union flag flutters on the Victoria Tower at the Houses of Parliament, as Parliament is recalled to ratify legislation confirming Britain’s departure from the European Union, in London, Britain December 30, 2020. REUTERS/Toby Mel

© Reuters. FILE PHOTO: The British union flag flutters on the Victoria Tower at the Houses of Parliament, as Parliament is recalled to ratify legislation confirming Britain’s departure from the European Union, in London, Britain December 30, 2020. REUTERS/Toby Mel

By Susanna Twidale and Kate Holton

LONDON (Reuters) - Britain plans to adopt a new model to fund its nuclear energy expansion under which households pay a small amount each month for new plants while they are still being constructed, the government said on Tuesday.

Britain aims to reach net zero emissions by 2050, which will require a huge increase in low-carbon power generation such as wind, solar and nuclear. [L8N23Y23F]

The country is hoping to build a fleet of new nuclear plants to help replace aging coal and nuclear facilities and cut greenhouse gas emissions, but developers have struggled to finance new projects.

The government said it would propose the new Nuclear Energy (financing) Bill, which would use the regulated-asset-based (RAB) model through which companies building new plants would be paid during the construction phase, cutting down their development risk and allowing them to secure cheaper financing for the projects.

Proponents say the model, previously used in the UK to finance monopoly infrastructure assets such as water, gas and electricity networks, would ultimately lower the cost of new projects for consumers.

Critics of RAB say it will leave taxpayers liable for any cost over-runs and delays during construction.

France's EDF (PA:EDF) is building Britain’s first new nuclear plant in more than two decades, Hinkley Point C, with backing from China's CGN.

EDF initially promised power from the plant would cooking Britons' Christmas dinners in 2017, but it is unlikely to be completed until 2026 at the earliest and its budget has swelled to 22 billion-23 billion pounds..

EDF said the new legislation will pave the way for it to go forward with another new plant, Sizewell C.

"This legislation is a big step forward and will allow us to fund Sizewell C," an EDF spokesperson said via email.

With the right consents in place it could start construction on the new plant this parliament, the spokesperson said.

The government said the RAB model would likely add a few pounds to typical household bills during the early stages of construction and on average less than 1 pound a month during the full construction phase.

It also estimated that the model could save more than 30 billion pounds ($41 billion) over the lifetime of a new nuclear project and attract funding from British financial institutions.

© Reuters. Workers at the nuclear reactor area under construction, are seen at Hinkley Point C nuclear power station site, near Bridgwater, Britain, September 12, 2019.  REUTERS/Peter Nicholls

"The existing financing scheme led to too many overseas nuclear developers walking away ... We urgently need a new approach to attract British funds and other private investors," Business and Energy Secretary Kwasi Kwarteng said in a statement.

($1 = 0.7272 pounds)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.